Education Industry Mergers, Acquisitions Slow in 2020 During COVID-19 Era

Contributing Writer

Fueled by a multi-billion dollar mega deal, the value of mergers and acquisitions in the education industry skyrocketed by more than 80 percent in the first half of the year, though the number of overall transactions dipped to at least a 30-month low, a new analysis finds. 

Overall, the dollar value of deals increased from $4.9 billion in the first half of 2019 to $9 billion during the same period this year, according to research by the investment bank Berkery Noyes.

Much of that total came from a single higher education deal with a $6 billion price tag: Blackstone’s purchase of student housing company iQ Student Accommodation, which has been described as the largest-ever private property deal in the United Kingdom. 

Berkery Noyes M&A Market Dynamics Graphic

Meanwhile, overall dealmaking activity has slowed during the Covid-19 era. There were 207 total mergers and acquisitions in the first six months of the year, down from 242 during the same period last year.

That figure also represents the fewest number of total deals for a six-month stretch since at least the beginning of 2018, the time period covered in the report by Berkery Noyes.

The investment group, which provides advice and financial consulting to middle market companies in the technology and information space, tracked 1,128 education deals between 2018 and June 2020. 

The overall dip in the number of mergers and acquisitions during the first half of 2020 was marked by a steep decline in private-equity backed deals. According to Berkery Noyes, only 41 of the 207 deals during the first six months of 2020 were financed by private equity, venture capital or some other investment firm, the lowest total in the 30-month period covering the report and about a 50 percent downturn compared to the same period in 2019.

Only seven deals in the first six-months of this year were valued at more than $100 million, and at least two were in the K-12 sector. About one-third of the total transactions had values in the range of $4.5 million to $54.6 million.

The industry’s biggest area of activity in the first half of 2020 was in the professional training services category, which rose by 36 percent from 44 to 60 deals. That accounted for nearly 30 percent of all transactions during the period, and marked a high for the sector going back to 2018.

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Activity in most every other segment tracked by Berkery Noyes —  aside from professional training technology and childcare services — was down compared to the first half of 2019, according to the report. That includes sectors specific to K-12 institutions and the K-12 media and tech space, which involve companies focused on media and software used in schools. 

Berkery Noyes did not specify an exact number of K-12 specific deals, but a chart in the report shows the lowest volume since at least 2018. 

Among some of the notable K-12 deals from the period: China Maple Leaf Education System’s $487 million purchase of Singapore’s Canadian International School; K12 Inc.’s acquisition of Galvanize, a Denver-based company that offers coding boot camp programs, for $165 million; and Chegg’s $96 million deal to buy the math problem-solving app Mathway.

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4 thoughts on “Education Industry Mergers, Acquisitions Slow in 2020 During COVID-19 Era

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